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UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


SUPPLEMENT    TO    TREASURY    DECISIONS 

(T-    D.    2889) 


TREASURY   DEPARTMENT 
UNITED  STATES  INTERNAL  REVENUE 


U-iS,      TntermL  i^€\>«y>u-e.  -WvJC«< 

REGULATIONS  NO.  57 


RELATING  TO  THE 

TAX  ON  TELEGRAPH,  TELEPHONE, 

RADIO,  AND  CABLE 

FACILITIES 

UNDER  THE 

REVENUE  ACT  OF  1918 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 

1919 


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in  %Y  5  J 
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TABLE  OF  CONTENTS. 


PERTINENT  PROVISIONS  OF  THE  ACT. 

Page. 

Sections  500  (f),  (g),  and  (h),  501,  502,  1310  (a),  1308, 1309  of  Revenue  Act  of  1918, 
Bections  3220  and  3176,  Re^'ised  Statutes 5 

PART  I. 

TRANSMISSION    OF   DISPATCHES,    MESSAGES,    AND    CON- 

VERSATIONS. 

IMPOSITION  OF  TAX. 

Article  1.  Imposition  of  tax — Transmission 9 

2.  Imposition  of  tax — Carrier 9 

ORIGIN  OF  MESSAGE  DETERMINES  TAXABILITY 

3.  Origin  within  United  States 10 

4.  Reversed  or  collect  messages 10 

5.  Origin  on  or  after  April  1,  1919 10 

BASIS.  RATE  AND  COMPUTATION  OF  TAX. 

6.  Basis  for  computation — Amount  of  charge 10 

7.  Franks : H 

8.  Overtime  telephone  messages 11 

9.  Messages  transmitted  under  contract 11 

EXEMPTIONS. 

10.  Business  of  transmitting  carrier 11 

11.  Charges  of  14  cents  or  less 11 

12.  Services  rendered  to  the  United  States,  or  to  any  State  or  Territory, 

or  to  the  District  of  Columbia 12 

13.  Political  subdi^dsion3  of  State  or  Territory 12 

14.  Government  agencies 12 

15.  Railroads  under  Federal  control 12 

16 .  Evidence  of  right  to  governmental  exemption 12 

17.  Foreign  diplomats 12 

18.  Evidence  of  right  to  exemption  of  foreign  diplomats 13 

PART  II. 

LEASED  WIRE  AND  TALKING  CIRCUIT  SPECIAL  SERVICE. 

IMPOSITION  OF  TAX. 

19.  Imposition  of  the  tax — lu'caning  of  leased  wire  and  talking  circuit 

special  scr\dce 1'^ 

20.  I'rivate  branch  exchange  service 14 

21.  Tie  lines 15 

22.  Pnvate  lines  and  extension  lines !'"> 

23.  In'er.-N)mmuni(Mti')n  and  iuteriir  systems 15 

24.  Long-distance  terminals 1^ 

3 


4  TABLE   OF   CONTENTS. 

BASIS.  RATE.  AND  COMPUTATION  OF  TAX. 

rage. 

Article  25.  Basis  for  computatiou  of  tax 15 

26.  Oomputntion  of  tax— Effective  date 16 

27.  Computatiou  of  tax — Service  performed  between  a  point  within  and 

a  point  without  the  United  States IS 

EXEMPTIONS. 

28.  Governmental  and  of  foreign  diplomats 16 

29.  Public  press 16 

30.  Business  of  common  carrier  or  telegraph  or  telephone  company. ...  17 

PART  III. 

PAYMENT,    COLLECTION,    RETURN,    AND    REMITTANCE    OF 

TAXES. 

31.  Payment  of  taxes 18 

32.  Collection  of  taxes 18 

33.  Credit  for  taxes 18 

34.  Records. 19 

35.  Returns — Contents 19 

36.  Returns — Where  and  when  rendered 19 

37.  Extension  of  time 19 

38.  Remittance  of  taxes  collected 19 

CREDITS  AND  REFUNDS. 

39.  Credit  for  overpayment 20 

40.  Refund  of  overpayment ^ 20 

41.  Refund  of  overcollection 20 

PENALTIES. 

42.  Penalties ^,  21 

AUTHORITY  FOR  REGULATIONS. 

43.  Promulgation  of  regulations 22 


REGULATIONS   RELATING  TO  THE  TAX  ON  TELEGRAPH,  TELEPHONE, 

RADIO,  AND  CABLE  FACILITIES. 


PROVISIONS  OF  THE  REVENUE  ACT  OF  1918. 
Title  V. — Tax  on  Transportation  and  Other  Facilities,  and  on  Insurance. 

IMPOSITION  OF  TAX. 

SECTIONS  500  (f),  (g),  AND  (h),  501  (a)  AND  (c),  REVENVE  ACT  OF  1918. 

Sec.  500.  That  from  and  after  April  1,  1919,  there  shall  be  levied, 
assessed,  collected,  and  paid,  in  lieu  of  the  taxes  imposed  by  section 
500  of  the  revenue  act  of  1917— 

*  *  *  *  *  *  * 

(f)  In  the  case  of  each  telegraph,  telephone,  cable,  or  radio,  dis- 
patch, message,  or  conversation,  which  originates  on  or  after  such 
date  within  the  United  States,  and  for  the  transmission  of  which 
the  charge  is  more  than  14  cents  and  not  more  than  50  cents,  a  tax 
of  5  cents;  and  if  the  charge  is  more  than  50  cents,  a  tax  of  10  cents: 
Provided,  That  only  one  pajTnent  of  such  tax  shall  be  required,  not- 
withstanding the  lines  or  stations  of  one  or  more  persons  are  used 
for  the  transmission  of  such  dispatch,  message,  or  conversation;  and 

(g)  A  tax  equivalent  to  10  per  centum  of  the  amount  paid  after 
such  date  to  any  telegraph  or  telephone  company  for  any  leased 
wire  or  talking  circuit  special  service  furnished  after  such  date. 
This  subdivision  shall  not  appl}^  to  the  amount  paid  for  so  much  of 
such  service 'as  is  utilized  (1)  in  the  collection  and  dissemination  of 
news  through  the  public  press,  or  (2)  in  the  conduct,  by  a  common 
carrier  or  telegraph  or  telephone  company,  of  its  business  as  such; 

(h)  No  tax  shall  be  imposed  under  this  section  upon  any  pay- 
ment received  for  services  rendered  to  the  United  States  or  to  any 
State  or  Territory  or  the  District  of  Columbia.  The  right  to  ex- 
emption under  this  subdivision  shall  be  evidenced  in  such  manner 
as  the  Commissioner,  with  the  approval  of  the  Secretary,  may  by 
regulation  prescribe. 

Sec.  501.  (a)  That  the  taxes  imposed  by  section  500  shall  be 
paid  by  the  person  paying  for  the  services  or  facilities  rendered. 

*  *  *  *  *  *  * 

(c)  The  taxes  imposed  by  section  500  shall  apply  to  all  services 
or  facilities  specified  in  such  section  when  rendered  for  hire,  whether 
or  not  the  agency  rendering  them  is  a  common  carrier. 

4=  ♦  «  *  IN  «  V 

5 


6       TAX  ON  TELEGRAPH,  TELEPHONE,  EADIO,  AND  CABLE  FAOILITIES. 
COLLECTION  AND  RETURN  OF  TAX. 

SECTIONS  502  AND  1309  OV  REVENUE  ACT  OF  1918. 

Sec.  502.  That  each  person  receiving  any  payments  referred  to  in 
section  500  shall  collect  the  amount  of  the  tax,  if  any,  imposed  by 
such  section  from  the  person  making  sucl;  ])ayments,  and  shall  make 
monthly  returns  under  oath,  in  du])licate,  and  ])ay  the  taxes  so  col- 
lected *  *  *  to  the  collector  of  the  district  in  which  the  princi- 
pal office  or  place  of  business  is  located. 

******* 

Any  person  making  a  refund  of  any  jjayment  upon  which  tax  is 
collected  under  this  section  ma}'^  repay  thercAvith  the  amount  of  the 
tax  collected  on  such  payment;  and  the  amount  so  re]>aid  may  be 
credited  against  amounts  included  in  any  susequent  monthly 
return. 

The  returns  required  under  this  section  shall  contain  such  informa- 
tion, and  be  made  at  such  times  and  in  such  manner,  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  by  regulation  pre- 
scribe. 

The  tax  shall,  without  assessment  by  the  Commissioner  or  notice 
from  the  collector,  be  due  and  payable  to  the  collector  at  the  time 
so  fixed  for  filing  the  return     *     *     *. 

Sec.  1309.  That  the  Commissioner,  with  the  approval  of  the  Sec- 
retary, is  hereby  authorized  to  make  all  needful  rules  and  regula- 
tions for  the  enforcement  of  the  provisions  of  this  act. 

The  Commissioner  with  such  approval  may  by  regulation  provide 
^h.at  any  return  required  by  Titles  *  *  *  y  [which  includes 
sections  500,  501,  and  502]  *  *  *  to  be  under  oath  may,  if  the 
amount  of  the  tax  covered  thereby  is  not  in  excess  of  $10,  be  signed 
or  acknowledged  before  two  witnesses  instead  of  under  oath. 

CREDITS  AND  REFUNDS. 

SECTION  1310  (a)  OF  REVENUE  ACT  OF  1918. 

Sec.  1310.  (a)  That  in  the  case  of  any  overpayment  or  overcol- 
lection  of  any  tax  imposed  by  *  *  *  Title  V  [which  includes 
sections  500,  501,  and  502]  *  *  *  the  person  making  such  over- 
payment or  overcollection  may  take  credit  therefor  against  taxes 
due  upon  any  monthly  return,  and  shall  make  refund  of  any  exces- 
sive amount  collected  by  him  upon  proper  application  by  the  person 
entitled  thereto. 

SECTION    3220   OF    UNITED    STATES    REVISED    STATUTES,    AS    AMENDED    BY    SECTION 

131G  (a)  OF  REVENUE  ACT  OF  191S. 

Sec.  3220.  The  Commissioner  of  Internal  Revenue,  subject  to 
regulations  prescribed  by  the  Secretary  of  the  Treasury,  is  authorized 
to  remit,  r(?fund,  and  pay  back  all  taxes  erroneously  or  illegally 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILTl'iES.       7 

assessed  or  collected,  all  penalties  collected  without  authority,  and 
all  taxes  that  appear  to  bo  unjustly  assessed  or  excessive  m  amount, 
or  in  any  manner  wrongfully  collected     *     *     *. 

PEN'ALTIES. 

SECTION  3176  OF  UNITED  STATES  REVISED  STATUTES.  AS  AMENTOED  3Y  SECTION  1317 

OF  REVENUE  ACT  OF  191S. 

Sec.  3176.  *  *  *  In  case  of  any  failure  to  make  and  file  a  retui-n 
or  list  vrithin  the  time  prescribed  by  law,  or  prescribed  by  the  Com- 
missioner of  Internal  Revenue  or  the  collector  in  pursuance  of  law, 
the  Commissioner  of  Internal  Revenue  shall  add  to  the  tax  25  per 
centum  of  its  amount,  except  that  vrhen  a  return  is  filed  after  such 
time  and  it  is  sho\vii  that  the  failure  to  file  it  was  due  to  a  reasonable 
cause  and  not  to  willful  neglect,  no  such  addition  shall  be  made  to 
the  tax.  In  case  a  false  or  fraudulent  return  or  list  is  v/illfully  made, 
the  Commissioner  of  Internal  Revenue  shall  add  to  the  tax  50  per 
centum  of  its  amount. 

The  amount  so  added  to  any  tax  shall  be  collected  at  the  same  time 
and  in  the  sam.e  manner  and  as  part  of  the  tax  unless  the  tax  lias 
been  paid  before  the  discovery  of  the  neglect,  falsity,  or  fraud,  in 
which  case  the  amount  so  added  shall  be  collected  in  the  same  mamier 
as  the  tax. 

SECTIONS  .^02  AND  1308  OF  REVENUE  ACT  OF  3018. 

Sec.  502.  *  *  *  If  the  tax  is  not  paid  when  due,  there  shall  be 
added  as  part  of  the  tax  a  penalty  of  5  per  centum,  together  with 
interest  at  the  rate  of  1  per  centum  for  each  full  month,  from  the 
time  when  the  tax  became  due. 

Sec.  1308.  (a)  That  any  person  required  under  Titles  *  *  ^  * 
[which  includes  sections  500,  501,  and  5021  *  *  *  to  pay,  or  to 
collect,  account  for  and  pay  over  any  tax,  or  required  by  law  or 
regulations  made  under  authority  thereof  to  make  a  retmii  or  supply 
any  information  for  the  purposes  of  the  computation,  assessment  or 
collection  of  any  such  tax,  who  fails  to  pay,  collect,  or  truly  account 
for  and  pay  over  any  such  tax,  make  any  such  return  or  supply  any 
such  information  at  the  time  or  times  required  by  law  or  regulation 
shall  in  addition  to  other  penalties  provided  by  law  be  subject  to  a 
penalty  of  not  more  than  $1,000. 

(b)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  ac- 
count for  and  pay  over  any  such  tax,  make  such  return  or  supply 
Buch  information  at  the  time  or  times  required  by  law  or  regulation, 
or  -^Vho  willfully  attempts  in  any  manner  to  evade  such  tax  shall  be 
guilty  of  a  misdemeanor  and  in  addition  to  other  penalties  provided 
by  law  shall  be  fined  not  moTo  than  $10,000  or  imprisoned  for  no< 
more  than  one  year,  or  both,  together  with  the  costs  of  prosecoition 


8       TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES. 

(c)  iViiy  person  who  AWllfully  refuses  to  pay,  collect,  or  truly  account 
for  and  pay  over  any  such  tax  shall  in  atklition  to  other  penalties 
provided  by  law  bf  liable  to  a  penalty  of  the  amount  of  the  tax 
evaded,  or  not  paid,  collected,  or  accounted  for  and  paid  over,  to  be 
assessed  and  collected  in  the  same  manner  as  taxes  are  assessed  and 
collected:  Provided,  however,  That  no  penalty  shall  be  assessed  under 
this  subdivision  for  any  offense  for  which  a  penalty  may  be  assessed 
mider  authority  of  section  317G  of  the  .Revised  Statutes,  as 
amended     *     *     *. 

(d)  The  term  "person"  as  used  in  this  section  includes  an  officer 
or  employee  of  a  corporation  or  a  member  or  employee  of  a  partner- 
ship, who  as  such  ofhcer,  employee,  or  member  is  mider  a  duty  to 
perform  the  act  in  respect  of  which  the  violation  occurs. 

AUTHORITY  FOR  REGULATIONS. 

SECTION  1309  OF  REVENUE  ACT  OF  1918. 

Sec.  1309.  That  the  Commissioner,  with  the  approval  of  the  Sec- 
retary, is  hereby  authorized  to  make  all  needful  rules  and  regulations 
for  the  enforcement  of  the  provisions  of  this  act     *     *     *. 


PART  I. 

TRANSMISSION  OF  DISPATCHES,  MESSAGES,  AND  CONVER- 
SATIONS. 

SECTION  500  (f)  ANT)  (h)  OF  REVENUE  ACT  OF  191S. 

Sec.  500.  That  from  and  after  April  1,  1919,  there  shall  be  le\'ied,  assessed,  collected, 
and  paid,  in  lieu  of  the  taxes  imposed  by  section  500  of  the  revenue  act  of  1917 — 
******* 

(f)  In  the  case  of  each  telegraph,  telephone,  cable,  or  radio,  dispatch,  message, 
or  conversation,  wliich  originates  on  or  after  such  date  within  the  United  Statc-is,  and 
for  the  transmission  of  which  the  charge  is  more  than  14  cents  and  not  more  than  50 
cents,  a  tax  of  5  cents;  and  if  the  charge  is  more  than  50  cents,  a  tax  of  10  cents:  Pro- 
vided, That  only  one  i)ayment  of  such  tax  shall  be  required,  notwithstanding  the 
lines  or  stations  of  one  or  more  persons  are  used  for  the  transmission  of  such  dispatch, 
message,  or  conversation; 

******* 

(h)  No  tax  shall  be  imposed  under  this  section  upon  any  payment  received  for 
services  rendered  to  the  United  States  or  to  any  State  or  Territory  or  the  District  of 
Columbia.  The  right  to  exemption  under  this  subdivision  shall  be  evidenced  in 
Buch  manner  as  the  Commissioner,  mth  the  approval  of  the  Secretarj-,  may  by  regu- 
lation prescribe. 

IMPOSITION  OF  TAX. 

Article  1.  Imposition  of  the  tax — Transmission. — The  tax  is  im- 
posed upon  the  transmission  of  a  message  or  conversation,  by  tele- 
phone, telegraph,  radio,  or  cable.  Transmission  includes  services 
rendered  and  facilities  provided  b}'  the  carrier  necessary  or  incidental 
to  the  actual  movement  of  the  message;  for  example,  messenger 
service  utilized  in  the  movement  of  a  toll  message. 

Transmission  begins  v>-hen  the  message  is  delivered  by  the  sender 
to  the  carrier  or  its  agent,  and  continues  until  its  receipt  by  the 
addressee  or  his  agent.  Where,  therefore,  a  message  passes  by  the 
combined  facilities  of  several  lines,  there  is  one  message  and  one 
transmission.  But  where  a  sender  uses  a  telephone  toll  message  to 
reach  a  telegraph  ofTice  to  secure  the  transmission  of  a  telegraph 
message,  the  place  of  delivery  of  the  telegraph  message  by  the  sender 
to  the  carrier  is  the  telegraph  office,  and  the  transmission  of  the 
telegraph  message  begins  there.  The  telephone  message  is  a  separate 
message  and  as  such  subject  to  the  provisions  of  the  act. 

Art.  2.  hnyosition  of  tax — Carrier. — The  tax  applies  to  transmis- 
sion services  when  rendered  for  hire,  whether  or  not  the  agency 
rendering  them  is  a  common  carrier  (sec.  501  (c)).  Accordingly,  a 
carrier  of  dispatches,  messages,  or  conversations  by  telegraph,  tele- 
phone, cable,  or  radio  is  held  to  be  any  person,  corporation,  partner- 
ship, or  association  who  or  which,  for  hire,  fm'nishes  the  services 
122330°— 19 2  9 


lU       TAX  ON  l-ELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FAOILITIES. 

or  facilities  described  or  referred  to  in  section  500,  subdivisions  (f) 
and  (g),  of  tile  act. 

Tliercforc,  whore  the  lessee  of  a  leased  wii-e  or  talking  circuit  special 
service  transmits  messages  for  hire,  ho  is  a  carrier  of  such  messages 
and  liable  io  the  provisions  of  the  act  relative  to  the  collection,  report, 
and  payment  of  the  taxes  thereon. 

ORIGIN  OF  MESSAGE  DETERMINES  TAXABILITY. 

Art.  3,  Originating  within  the  United  States.- — The  tax  is  upon  the 
transmission  b}''  telephone,  telegraph,  radio,  or  cable  of  dispatches, 
messages,  and  conversations  oxiginating  within  the  United  States. 

Messages  transmitted  from  a  point  within  the  United  States  to  a 
point  without  the  United  States  are  subject  to  the  provisions  of  the 
act  unless  sent  with  charges  "reversed"  or  "collect."  Messages 
transmitted  from  a  point  without  the  United  States  to  a  point  within 
the  United  States  are  not  subject  to  the  tax,  imless  sent  with  charges 
''reversed"  or  "collect." 

The  term  "United  States"  includes  the  States,  the  Territories  of 
Alaska  and  Hawaii,  and  the  District  of  Columbia;  it  also  includes  all 
inland  waters  (such  as  rivers,  lakes,  bays,  etc.)  lying  wholly  within 
the  United  States,  and,  where  an  international  boundary  line  divides 
inland  waters,  the  parts  of  such  inland  waters  as  lie  within  the 
boundary  of  the  United  States;  and  also  the  waters  known  as  a 
marine  league  from  low  tide  on  the  coast  line.  Radio  messages  sent 
from  ships  within  the  above  limits  are  therefore  subject  to  the  pro- 
visions of  the  act. 

Art.  4.  Reversed  or  collect  messages. — The  point  of  origin  of  mes- 
sages transmitted  with  charges  "reversed"  or  "collect"  is  the  point 
at  which  the  charge  is  collectible ;  that  is,  the  point  of  receipt  of  the 
message  by  the  addressee. 

Art.  6.  Originating  on  or  after  Afril  1,  1919.~The  tax  is  imposed 
upon  the  transmission  by  telephone,  telegraph,  radio,  or  cable  of 
dispatches,  messages,  and  conversations  originating  on  or  after  April 
1,  1919.     The  time  of  the  payment  of  the  charge  is  immaterial. 

BASIS,  RATE,  AND  COMPUTATION  OF  TAX. 

Art.  6.  Basis,  rate,  and  computation  of  tax. — The  basis  for  the 
computation  of  the  tax  is  the  amount  of  the  charge  for  the  transmission 
of  the  message.  (As  to  the  meaning  of  transmission,  see  art.  1.) 
The  term  "the  charge"  means  the  amount  charged  by  the  carrier 
for  the  transmission  of  the  particular  message.  Such  charge  may 
be  due  in  money,  services  or  in  any  other  valuable  consideration. 

Only  two  amounts  of  tax  are  provided,  5  cents  and  10  cents,  im- 
posed as  follows: 

(1)  5  cents  on  messages  the  charge  for  the  transmission  of  which 
is  more  than  14  cents  and  not  more  than  50  cents; 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES.       11 

(2)  10  cents  on  messages  the  charge  for  the  transmission  of  which 
is  more  than  50  cents. 

Art.  7.  Franks. — The  fact  that  a  message  is  transmitted  under 
frank  is  immaterial  to  the  determination  of  the  taxability  of  the 
message.  If  the  message  is  in  fact  transmitted  free,  no  tax  apphes; 
but  if  the  carrier  in  fact  makes  a  charge,  in  money,  services  or  any 
other  consideration,  for  the  transmission  of  the  message,  the  tax 
applies  and  is  to  be  computed  upon  the  amount  of  the  charge 
imposed. 

Art.  8.  Overtime  felepJione  messages. — The  tax  on  overtime  tele- 
phone messages  is  to  be  computed  upon  the  total  charge  for  the 
transmission  of  tlie  message.  The  amount  of  the  initial  rate  for 
such  messages  is  immaterial. 

Art.  9.  Messages  transmitted  under  contract. — Where,  by  contract, 
a  telegraph,  telephone,  radio,  or  cable  company  agrees,  in  con- 
sideration of  the  payment  of  a  lump  sum  or  of  the  performance  of 
services,  to  transmit  messages  on  frank,  such  messages  arc  subject 
to  the  tax  imposed  by  this  section  (500  (f))  of  the  act.  The  tax  on 
each  such  message  is  to  be  computed  upon  the  amount  of  the 
regular  established  charge  for  the  transmission  of  similar  messages 
for  ordinary  customers,  calculated  at  the  regular  fixed  rate  provided 
in  the  tariffs  of  the  transmitting  carrier.  The  questions  as  to  whether 
such  messages  relate  to  the  operation  of  the  business  of  a  common 
carrier  and  whether  the}'  are  "on  line"  or  "off  line"  are  immaterial. 
Thus,  a  telegraph  company'  agrees  to  transmit  over  its  lines  on  a 
railroad  line  all  messages  relating  to  railroad  business  "free"  and 
all  such  messages  over  its  lines  oft  the  railroad  lines  "free"  to  an 
amount  not  exceeding  SI 0,000  per  3-ear  calculated  at  its  regular 
rates,  and  all  messages  over  that  amount  at  half  rates,  in  considera- 
tion of  services  to  be  performed  by  the  railroad  in  the  transporta- 
tion of  men  and  materials  of  the  telegraph  company.  All  such  mics- 
sages,  whether  "on  line"  or  "off  line,"  and  whether  "free"  or  at 
half  rates,  are  subject  to  the  tax  provided  by  this  section  (500  (f)) 
of  the  act.  The  tax  must  be  computed,  collected,  and  paid  upon 
each  such  message.  (Where  common  carrier  is  a  railroarl  under 
Federal  control,  see  art.  14.) 

EXEMPTIONS. 

Art.  10. — Exemption — Business  of  transmitting  carrier. — The  trans- 
mission of  messages  involved  in  the  operation  of  the  busines.«  of  the 
transmitting  carrier,  as  such,  is  not  subject  to  the  tax. 

Art.  11.  Exemption — Cliarges  of  I  If.  cents  or  less. — Dispatches, 
messages,  or  conversations,  for  the  transmission  of  which  by  tele- 
graph, telephone,  radio,  or  cable  the  charge  is  14  cents  or  lees,  are  not 


12       TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES. 

subject  to  tax.     (As  to  the  meaning  of  transmission,  see  Art.  1;  as 
to  the  computation  of  the  tax,  see  Ai-ts.  6-9.) 

Art.  12.  Exemption — Services  rendered  to  the  United  States  or  to 
any  State  or  Territory  or  to  the  District  of  Columbia. — Telephone,  tele- 
graph, cable,  and  radio  dispatches,  messages,  and  conversations 
relating  to  Governmejit  business,  which  originate  in  the  United  States 
and  which  are  a  charge  against  the  Treasurer  of  the  United  States, 
the  District  of  Columbia,  a  State,  or  Territory,  and  are  jaid  from 
the  funds  thereof,  are  exempt  from  the  tax.  Messages,  conversa- 
tions, and  dispatches  which  are  not  paid  from  such  funds  are  not 
exempt  from  tax,  even  though  they  relate  to  Government  business. 

Art.  13.  The  words  "State"  and  "Territory"  as  used  in  section 
500  (h)  of  the  act  and  in  Article  12  (above),  include  political  subdivi- 
sions thereof,  such  as  counties,  cities,  towns,  and  other  municipalities. 

Art.  14.  Government  agencies. — Services  rendered  to  agencies  of 
the  United  States  are,  subject  to  the  conditions  prescribed  in  article 
12,  exempt  from  tax.  Such  agencies  include  the  American  National 
Red  Cross,  United  States  Shipping  Board,  Emergency  Fleet  Cor- 
poration, United  States  Food  Administration,  United  States  Housing 
Corporation,  Commission  on  Training  Camp  Activities,  War  Savings 
Committee,  Liberty  Loan  Committee,  War  Lidustries  Board,  Federal 
Farm  Appraisers,  Federal  Land  Banks,  Federal  ReserveBanks,  Panama 
Railroad  Co.,  and  similar  agencies  supported  by  Government  funds. 

Art.  15.  Railroads  under  Federal  control. — Telegraph,  telephone, 
cable,  and  radio  dispatches,  messages,  and  conversations  transmitted 
for  railroads  under  Federal  control,  charges  for  which  are  paid  from 
funds  of  the  United  States,  are  exempt  from  tax,  such  transmission 
being  a  service  rendered  the  United  States. 

Art.  16.  Evidence  of  right  of  exemption. — Where  a  message  is 
accepted  and  transmitted  by  a  carrier  as  a  Government  message, 
and  the  charges  therefor  are  subsequently  paid  from  Government 
funds,  the  payment  of  such  charge  by  the  Government  shall  be  con- 
sidered evidence  of  the  right  of  such  message  to  exemption.  The 
evidence  of  the  payment  of  the  charge  from  Government  funds  shall 
be  considered  sufficient  evidence  of  the  right  to  such  exemption. 

Payments  made  by  direction  of  the  Director  General  of  Railroads 
shall  be  considered  to  be  made  from  Government  funds. 

Art.  17.  Exemptions — Foreign  diplomats. — (a)  Ambassadors,  min- 
isters, and  other  properly  accredited  diplomatic  representatives  of 
foreign  Governments  to  the  United  States  are  exempt  from  the 
payment  of  taxes  upon  the  transmission  of  messages  sent  by  or  for 
them. 

(b)  The  exemption  does  not  apply  to  consuls  or  to  any  officials  of 
foreign  Governments  other  than  those  specified  in  paragraph  (a). 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  PACILITIKS.        13 

(c)  The  exemption  does  not  apply  to  messages  the  charge  for  the 
transmission  of  which  is  paid  by  a  foreign  Government,  except  in 
the  cases  provided  for  in  paragraph  (a). 

Aet.  18.  Evidence  of  right  to  exemption. — The  following  form  may 
be  used  to  secure  exemption  when  signed  by  an  ambassador,  minister, 
or  any  other  properly  accredited  diplomatic  representative  of  a  foreign 
Government : 


,19.. 

(Date.) 

I  certify  that  thia  message  from to 

over is     transmitted     by attached     to 

my and  is  exempt  from  tax. 


(Title.) 
(Address.) 


PART  II. 
LEASED    WIRE   AND    TALKING    CIRCUIT    SPECIAL    SERVICE. 

SECTION  500  (u)  AND  (h)  OF  THE  REVENUE  ACT  OF  1918. 

Seo.  500.  That  from  and  after  April  1, 1919,  there  shall  be  levied,  assessed,  collected, 
and  paid,  in  lieu  of  the  taxes  imposed  by  section  500  of  the  revenue  act  of  1  )n — 
t>v  *  *  *  *  *  * 

(g)  A  tax  equivalent  to  10  per  centum  of  the  amount  paid  after  such  date  to  any 
telegraph  or  telephone  company  for  any  leased  wire  or  talking  circuit  special  service 
furnished  after  such  date.  This  subdivision  shall  not  apply  to  the  amount  paid  for 
so  much  of  such  service  as  is  utilized  (1)  in  the  collection  and  dissemination  of  news 
through  the  public  press,  or  (2)  in  the  conduct,  by  a  common  carrier  or  telegraph  or 
telephone  company,  of  its  business  as  such; 

(h)  No  tax  shall  be  imposed  under  this  section  upon  any  payment  received  for 
services  rendered  to  the  United  States  or  to  any  State  or  Territory  or  the  District  of 
Columbia.  The  right  to  exemption  under  this  subdivision  shall  be  evidenced  in 
such  manner  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may  by  regu- 
lation prescribe. 

IMPOSITION  OF  TAX. 

Art.  19.  Imj^osition  of  the  tax — Leased  wire  or  talking  circuit 
special  service. — The  tax  is  imposed  upon  the  amount  paid  for  any 
leased  wire  or  talking  circuit  sj^ecial  service. 

Leased  wire  special  service. — Leased  "W'ire  special  service  includes 
exclusive  leases  of  wires  and  also  contracts  by  which  the  carrier 
agrees  to  furnish  a  circuit  (that  is,  a  wire  or  wires,  instruments  and 
electrical  energy)  for  the  transmission  of  messages  in  Morse  characters 
or  by  spoken  word  between  specified  points  or  offices  during  specified 
hours.     Operators  may  or  may  not  be  employees  of  the  carrier. 

For  administrative  purposes  it  is  held  that  where  the  area  covered 
by  a  leased  wire  special  service  is  served  by  a  local  telephone  ex- 
change, tolls  not  being  charged  upon  messages  transmitted  between 
points  within  such  area,  such  special  service  does  not  come  within 
the  provisions  of  the  act. 

Talking  circuit  special  sei^ce. — Talking  circuit  special  service  is  a 
limited  class  of  leased  wire  special  service  and  refers  to  such  service 
where  the  transmission  is  telephonic. 

Such  a  talking  circuit  may  by  contract  have  one  terminal  at  a 
switchboard  of  the  carrier,  allowing  connection  with  any  telephone 
within  the  local  exchange  area  of  the  operating  station.  Such  addi- 
tional exchange  and  other  incidental  service  is  included  in  the  term 
"talking  circuit  special  service." 

Art.  20.  Private  branch  exchange  service. — Amounts  paid  for  private 
branch  exchange  service  (called  P.  R  X.  service)  where  the  exchange 
equipm«nt  is  located  on  the  premises  of  the  lessee  and  is  used  for 
3.4 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACH,ITIE5.       15 

intercommunication  between  departments  of  the  business  or  parts  ol 
the  premises  of  the  lessee,  are  not  subject  to  tax.  Any  aaroount  paid 
for  special  service  at  the  central  exchange  in  the  handling  of  calls 
from  such  a  private  branch  exchange  is  included  in  the  term  "private 
branch  exchange  service." 

Ajrt.  21.  Tie  lines. — The  term  "  tie  line  "  is  used  to  denote  a  line  con- 
necting two  private  branch  exchanges.  The  amount  paid  for  rental  of  a 
tie  line  connecting  two  or  more  private  branch  exchanges  located  within 
an  area  served  by  a  local  telephone  exchange  without  charging  tolls,  is 
to  be  considered  part  of  the  amount  paid  for  private  branch  exchange 
service  and  is  not  subject  to  tax.  But  a  tie  line  connecting  two  or 
more  private  branch  exchanges  not  within  the  same  local  telephone 
exchange  area,  tolls  being  ordinarily  imposed  upon  the  transmission 
of  messages  between  the  points  of  location  of  the  private  branch  ex- 
changes, is  a  leased  wire  and  the  amount  paid  for  the  rental  thereof 
is  subject  to  the  provisions  of  this  section  of  the  act. 

Art.  22.  Private  lines  and  extension  lines  are  subject  to  the  same 
distinction  and  same  rules  as  tie  lines. 

Art.  23.  Intercommunication  and  interior  systems  are  subject  to  the 
same  provisions  as  private  branch  exchanges. 

Art.  24.  Long-distance  terminals. — Amounts  paid  for  a  long-dis- 
tance terminal,  consisting  of  a  special  terminal  loop  from  a  local  toll 
position  or  a  long  line  switchboard  to  the  subscriber's  premises,  and 
used  only  for  long-distance  calls  at  the  regular  toll,  are  not  subject  to 
the  tax  imposed  by  this  section  of  the  act.  Messages  transmitted 
over  such  wires  are  subject  to  the  "message  tax"  provided  for  in 
section  500  (f). 

BASIS,  RATE,  AND  COMPUTATION  OF  TAX. 

Art.  25.  Basis,  rate,  and  com-putation  of  the  tax. — The  tax  imposed 
is  to  be  computed  at  10  per  cent  of  the  amovMt  paid  for  the  services 
specified. 

The  amount  paid  includes  the  contract  consideration  and  all  addi- 
tional charges  therein  provided,  including  salaries  of  operators  if  in 
the  employ  of  the  carrier,  charges  for  equipment,  instrmnents,  and 
other  apparatus,  drops  intermediate  to  the  terminals,  branch  or  "log" 
lines,  exchange  service,  and  overtime  service.  It  also  includes 
charges  for  incidental  additional  service,  including  charges  for  "serv- 
ice connection,"  "  termination,"  and  "moves"  when  such  are  involved 
in  the  special  service  contracted  for;  such  charges  not  involved  in 
such  special  service  are  not  subject  to  the  tax. 

In  th(i  payment  of  any  tax  under  this  section  a  fractional  part  of  a 
cent  shall  be  disregarded  unless  it  amounts  to  one-half  cent  or  more, 
in  wliich  case  it  shall  be  increased  to  one  cent.     (Sec.  1313  of  the  act.) 


16       TAX  ON  TEIiEGRAPlI,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES. 

Art  26.  Computation  of  tax — Effective  date. — The  tax  provided  in 
sectioTi  500  (g)  applios  where  (a)  the  amount  paid  for  such  service  is 
paid  after  April  1,  1919,  and  (b)  the  service  is  furnished  after  April  1, 
1919.  Therefore,  where  leased- wire  special  service  was  furnished  onor 
after  April  1,  1919,  but  the  consideration  therefor  had  been  paid  prior 
to  that  date,  the  tax  does  not  apply.  Likewise,  where  such  service 
was  furnished  prior  to  or  on  April  1,  1919,  the  tax  does  no'  apply, 
regardless  of  the  date  of  the  payment  for  the  charges  therefor. 

Art.  27.  Computation  of  tax — Service  performed  heiween  a  point 
within  and  a  point  luithout  the  United  States. — When  leased  wire  or 
talking  circuit  special  service  is  fiu'nislied  between  a  point  or  points 
within  the  United  States  and  a  point  or  points  without  the  United 
States  and  there  is  in  the  contract  no  reasonable  established  division 
of  charges  as  domestic  and  foreign,  the  tax  shall  be  paid  and  collected 
upon  the  amoimts  paid  for  incidental  services  or  facilities  furnished 
within  the  United  States  plus  that  proportion  of  the  general  contract 
consideration  as  the  wh'e  mileage  within  the  United  States  bears  to 
the  total  wu-o  mileage  contracted  for.  Where  there  is  a  reasonable 
division  of  charges  as  domestic  and  foreign  provided  in  the  contract, 
the  tax  shall  be  paid  and  collected  upon  the  amounts  specified  as 
payments  for  services  or  facilities  rendered  within  the  United  States. 

EXEMPTIONS. 

Art.  28.  Exemptions. — Services  to^  United  States,  the  States,  the 
District  of  Columbia,  and  to  Foreign  Diploraats. — The  exemptions  of 
services  rendered  the  United  States,  a  State  or  Territory  and  the 
District  of  Columbia,  and  foreign  diplomats  described  in  Articles  12 
to  18  above,  apply  also  to  this  section  of  the  act. 

Art.  29.  Exemptions — Puhlic  press. — The  tax  does  not  apply  to 
the  amount  paid  for  so  much  of  such  special  service  as  is  utilized  in 
the  collection  and  dissemination  of  news  tlirough  the  public  press. 
"Pubhc  press"  is  not  restricted  to  newspapers  or  to  any  particular 
portion  of  the  product  of  printing  presses.  Magazines,  periodicals, 
trade  and  scientific  publications,  published  for  the  information  of  the 
public,  are  included.  Organizations  such  as  the  Associated  Press  and 
the  United  Press  are  also  included. 

"News"  is  a  word  to  be  liberaU}^  construed.  Accounts  of  current 
events,  public  announcements,  information  relating  to  finance,  sci- 
ence, commerce,  rehgion,  civic,  or  other  public  organizations  are  held 
to  be  news. 

The  exemption  does  not  appl}^  to  the  publisher  or  to  the  publication 
as  such.  The  exemption  applies  only  to  the  amount  paid  for  so  much 
of  such  service  as  is  utilized  in  the  collection  o.nd  dissemination  of  news 
in  the  public  press.  If,  however,  a  contract  betv.'cen  a  person  or 
ftompauy  ««'agdged  in  the  collection  and  dissemination  of  ncv.s  tln-ough 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACH,ITIES.       17 

the  public  press  and  a  carrier  provides  for  leased  wire  or  talking  circuit 
special  service  to  be  utilized  exclusively  in  the  business  mentioned, 
the  carrier  is  not  required  to  collect  the  tax  upon  the  amounts  paid 
imder  such  contract  in  the  absence  of  actual  Imowledge  on  the  part 
of  the  carrier  that  the  service  is  being  used  for  other  purpof;es. 

The  exemption  has  no  application  to  the  transmission  o?  messages. 

Art.  30.  Exemption — Services  utilized  in  the  conduct  of  business  of 
common  carrier  or  telegraph  or  telephone  compam/. — The  tax  does  not 
apply  to  the  amount  paid  for  so  much  of  such  special  service  as  is 
utihzed  in  the  conduct,  by  a  common  carrier  or  telegraph  or  telephone 
company,  of  its  business  as  such. 

A  common  carrier  is  one  who  undertakes,  for  hire  or  reward,  to 
transport  the  goods  or  person  of  such  as  choose  to  employ  him  from 
place  to  place. 

The  exemption  does  not  apply  to  common  caiTicrs,  telegraph  and 
telephone  companies,  as  such.  It  applies  only  to  the  amount  paid 
for  so  much  of  such  service  Qeased  wire  or  talking  circuit)  as  is  utilized 
in  the  conduct  by  a  comjnon  carrier,  telegraph  or  telephone  company, 
of  its  business  as  such. 

Where,  however,  a  contract  between  a  common  carrier  (or  tele- 
graph or  telephone  company)  and  a  telegraph,  telephone,  radio,  or 
cable  company  provides  for  leased  wire  or  talking  circuit  special 
service  to  be  utilized  exclusively  in  the  conduct  of  the  business  of  the 
common  carrier  {or  telegraph  or  telephone  com,pa,ny)  as  such,  the  tele- 
graph, telephone,  cable,  or  radio  company  is  not  required  to  collect 
the  tax  upon  the  amounts  paid  under  such  contract  in  the  absence 
of  actual  knowledge  on  the  part  of  the  company  that  the  service  ia 
being  used  for  other  purposes. 

The  exemption  does  not  apply  to  contracts  which  provide  merely 
for  the  transmission  of  messages.  Tlius,  where  a  telegraph  or  tele- 
phono  company  agi'ees  by  contract  with  a  railroad  to  transmit,  on 
frank  or  otherwise,  the  messages  of  such  railroad,  its  officials,  or 
employees,  in  a  certain  manner  or  upon  certain  terms,  such  a  con- 
tract is  a  contract  providing  for  the  transmission  of  messages,  and 
each  such  message  is  subject  to  the  "message"  tax.  (See  Art.  9 
above.)  No  exemption  exists  by  reason  of  such  contract.  The  ex- 
emption applies  only  to  leased  wire  special  service  utilized  by  a 
common  carrier  in  the  conduct  of  its  business  as  such.  Thus  where 
a  telegraph  or  telephone  company  agrees  by  contract  to  set  apart  a 
certain  wire  or  wires  for  the  use  of  a  railroad  in  the  conduct  of  its 
business  as  such,  the  amounts  paid  for  such  service  are  not  subject 
to  tax.  A  proviso  in  such  a  contract  to  the  effect  that  when  such 
wire  or  wires  are  not  being  used  by  the  railroad  they  may  be  used 
by  telegraph  or  telephone  company  for  the  t:5-ansmi8sion  of  commer- 
cial messa<>:cs  will  not  change  the  character  of  the  contract. 


PART   III. 

PAYMENT,    COLLECTION,    RETURN,    AND    REMITTANCE    OF 

TAXES. 

SECTIONS  501  (a),  502,  AND  ia09  OF  REVENUE  ACT  OF  1918. 

Sec.  501.  (a)  That  the  taxed  imposed  by  section  500  shall  be  paid  by  the 
person  paying  for  the  sorvices  or  facilities  rendered. 

Sec.  502.  That  each  person  receiving  any  payments  referred  to  in  section 
600  shall  collect  the  amount  of  the  tax,  if  any,  imposed  by  such  section  from 
the  person  making  such  payments,  and  shall  make  monthly  returns  under 
oath,  in  duplicate,  and  pay  the  taxes  so  collected  *  *  *  to  the  collector 
of  the  district  in  which  the  principal  office  or  place  of  business  is  located. 
******* 

Any  jierson  making  a  refund  of  any  payment  upon  which  a  tax  is  collected 
under  thissection  may  repay  therewith  the  amount  of  the  tax  collected  on  such 
payment;  and  the  amount  so  repaid  may  be  credited  against  amounts  in  eluded 
In  any  subsequent  monthly  return. 

The  returns  required  under  this  section  shall  contain  such  information,  and 
be  made  at  such  times  and  in  such  manner,  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  may  by  regulation  prescribe. 

The  tax  shall,  without  assessment  by  the  Commissioner  or  notice  from  the 
collector,  be  due  and  payable  to  the  collector  at  the  time  so  fixed  for  filing  the 
return    *    *    *. 

Sec.  1309.  That  the  Commissioner,  with  the  approval  of  the  Secretary,  is 
hereby  authorized  to  make  all  needful  rules  and  regulations  for  the  enforce- 
ment of  the  proNdsions  of  this  act. 

The  Commissioner  with  such  approval  may  by  regulation  provide  that  any 
return  required  by  Titles  *  *  *  V  [which  includes  sections  500,  501,  and 
502]  *  *  *  to  be  under  oath  may,  if  the  amount  of  the  tax  covered  thereby 
is  not  in  excess  of  $10,  be  signed  or  acknowledged  before  two  witnesses 
instead  of  imder  oath. 

Art.  31.  Payment  of  taxes. — Taxes  imposed  by  section  500  (f)  and 
(g)  shall  be  paid  by  the  person  from  whom  the  carrier  collects  the 
charges  for  the  services  or  facilities  rendered. 

Art.  32.  Collection  of  taxes. — All  such  taxes  shall  be  paid  to  and 
collected  by  the  officers,  agents,  or  other  employees  of  the  carrier  to 
whiciii  the  charges  for  the  services  or  facilities  are  due. 

Art.  33.  Credit. — Where  credit  is  extended  by  a  carrier  to  a  sender 
or  addressee  for  the  payment  of  charges  for  the  transmission  of  a 
message,  or  to  the  lessee  of  special  service  for  the  payment  of  charges 
for  such  service,  and  such  charges  are  not  paid,  the  tax  nevertheless 
applies  and  the  carrier  is  liable  for  the  collection  thereof. 
18 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES.       19 

Art.  34.  Records. — Records  and  accounts  of  telegraph,  telephone, 
radio,  and  cable  companies  showing  records  of  (1)  all  dispatches, 
messages,  or  conversations  originating  on  the  lines  of  such  company, 
the'  charge  for  the  transmission  of  which  is  over  14  cents,  whether 
taxable  or  not,  (2)  of  leased  wire  and  talking  circuit  special  service 
rendered  by  the  company,  and  (3)  evidences  of  the  right  of  exemp- 
tion of  dispatches,  messages,  conversations,  and  special  service  upon 
which  tax  is  not  collected,  such  records  to  contain  sufficient  informa- 
tion to  determine  the  taxability  of  the  message  or  service  and  the 
amount  of  tax,  if  any,  upon  same,  shall  at  all  times  be  open  to  the 
inspection  of  officers  of  the  Treasury  Department. 

Art.  35.  Returns — Contents. — The  returns  of  a  telephone,  telegraph, 
radio,  or  cable  company  shall  be  rendered  on  Form  727  (Revised) 
and  shall  include  (a)  all  taxable  dispatches,  messages,  or  conver- 
sation originated  by  it  or  on  its  lines  and  (b)  such  leased  wire  or 
talking  circuit  special  services  as  are  recorded  and  accounted  for 
by  the  reporting  company  and  reflected  in  its  billing  records  for 
the  month,  following  its  usual  business  routine. 

Taxable  messages  which  originate  at  the  stations  of  rural  or  farmers' 
line  associations  and  which  are  recorded  and  billed  by  the  telephone 
company  operating  the  exchange  to  which  such  stations  are  connected 
for  service  should  be  included  in  the  return  of  said  operating  company. 
Taxable  messages,  if  they  originate  at  the  station  of  such  rural  or 
farmers'  line  associations  and  are  not  recorded  or  billed  by  the 
operating  company,  should  be  reported  by  such  association. 

Art.  36.  Returns — WTien  and  where  rendered. — Returns  must  be 
made  for  each  calendar  month.  Such  returns  must  be  made  under 
oath,  in  duplicate,  and  must  be  filed  with  the  collector  of  the  district 
in  which  the  principal  office  or  place  of  business  of  the  company  is 
located  on  or  before  the  last  day  of  the  calendar  month  following 
the  month  for  which  the  return  is  made.  Wliere  a  return  covers  a 
tax  of  $10  or  less  it  may  be  signed  and  acknowledged  before  two 
witnesses,  instead  of  under  oath. 

Art.  37.  Extension  of  time. — -Where  it  is  found  impossible  to  make 
the  proper  return  within  the  prescribed  time,  request  may  be  filed 
with  the  collector  for  an  extension  of  time,  and  upon  a  proper  showing 
the  collector  is  authorized  to  fix  a  definite  time  in  each  instance  within 
which  the  return  may  be  filed,  such  extension  of  time  not  to  exceed 
60  days. 

Art.  38.  Remittance  of  taxes  collected. — The  tax  is  due  and  payable 
by  the  person  collecting  the  tax  to  the  collector  of  internal  revenue 
at  the  time. fixed  for  filing  the  return. 


20       TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES. 

CREDITS  AND  REFUNDS. 

SECTION  502  OF  REVENUE  ACT  OF  1918. 

Sec.  502.  Any  person  making  a  refund  of  any  payment  upon  which  a  tax  is  col- 
lected under  this  section  may  repay  therewith  the  amount  of  the  tax  collected  on  such 
payment;  and  tho  amount  so  repaid  may  be  credited  against  amounts  included  in 
any  subsequent  monthly  return. 

SECTION  1310  (a)  OF  REVENUE  ACT  OF  1918. 

Sec.  1310.  (a)  That  in  the  case  of  any  overpayment  or  overcollection  any  tax  in-i- 
poeed  by  *  *  *  Title  V  [which  includes  sees.  500,  501,  and  502]  *  *  *  the 
person  making  such  overpayment  or  overcollection  may  take  credit  therefor  against 
taxes  due  upon  any  monthly  return,  and  sliall  make  refund  of  any  excessive  amuunt 
collected  bj'-  him  upon  proper  application  by  the  person  entitled  thereto. 

SECTION  3220  OF  UNITED  STATES  REVISED  STATUTES,  AS  AMENDED  BY  SECTION  131S  (a) 

OF  REVENUE  ACT  OF  19  IS. 

Sec.  3220.  The  Commissioner  of  Internal  Revenue,  subject  to  regulations  pre- 
Bcribed  by  the  Secretary  of  the  Treasury,  is  authorized  to  remit,  refund,  and  pay 
back  all  taxes  erroneously  or  illegally  assessed  or  collected,  all  penalties  collected 
without  authority,  and  all  that  appear  to  be  unjustly  assessed  or  excessive  in  amount, 
or  in  any  manner  wrongfully  collected    *    *    *. 

Art.  39.  Credit  for  overpayment. — Any  individual,  corporation, 
partnership,  or  association  that  has  paid  to  the  collector  of  internal 
revenue,  as  a  tax  under  section  500  of  the  act,  any  amount  erro- 
neously or  illegally  assessed  or  collected  or  any  amount  m  excess  of 
the  amount  of  the  tax  actually  imposed  by  that  section  for  the  month 
covered  by  that  payment,  may  claim  credit  for  such  overpayment 
against  the  amount  of  the  tax  imposed  by  that  section  which  is  due 
upon  any  other  monthly  return  thereafter  made  in  the  same  behalf 
on  Form  727  (Revised).  Such  credit  will  only  be  granted,  however, 
if,  in  making  the  claim,  the  instructions  pruited  on  the  back  of  that 
form  are  carefully  follovred. 

Art.  40.  Refund  of  overpayment.- — Any  individual,  corporation, 
partnership,  or  association  that  has  paid  to  the  collector  of  internal 
revenue,  as  a  tax  under  section  500  of  the  act,  any  .imount  erro- 
neously or  illegally  assessed,  or  any  amount  in  excess  of  the  amomit 
of  the  tax  actually  imposed  by  that  section  for  the  month  covered 
by  that  payment,  or  any  amomit  as  a  penalty  for  the  collection  of 
which  there  was  no  authority,  may  secure  a  refrnid  of  the  amount 
BO  overpaid  by  filing  with  the  collector  to  whom  such  payment  was 
made  a  properly  prepared  claim  on  Form  46  (revised). 

Art.  41.  Refund  of  overcollection. — Every  individual,  corporation, 
partnership,  or  association  that  has  collected  from  any  person,  as  a 
tax  under  section  600  of  the  act,  any  amount  in  excess  of  the 
amount  of  the  tax  imposed  by  that  section  actually '  due  from 
Buch  person,  shall  upon  proper  application  promptly  refund  such 
amount  to  the  person  entitled  thereto,  even  though  such  amount 
hao  already  been  paid  over  to  the  collector  of  internal  revenue  and 


TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACmiTIES.       21 

no  corresponding  credit  (see  art.- 39)  or  refund  (see  art.  40)  has  yet 
been  secured.  Any  person  making  a  refund  of  any  payment  upon 
which  tax  is  collected  under  this  section  may  repay  therewith  the 
amount  of  the  tax  collected  on  such  payment. 

PENALTIES. 

Art.  42.  Penalties. — The  penalties  provided  for  failure  or  refusal 
to  perform  any  of  the  duties  imposed  by  section  500  (f)  and  (g)  are 
the  same  as  those  provided  for  failure  or  refusal  to  perform  the 
duties  imposed  by  section  500  (a),  (b),  (c),  (d),  and  (e),  as  set  forth 
in  article  92,  Regulations  49. 

(1)  Section  502  of  the  act  specifically  provides  that  the  taxes 
under  section  500  shall  (without  assessment  by  the  Commissioner  or 
notice  from  the  collector)  be  due  at  the  time  fixed  for  filing  this 
return,  and  if  the  tax  is  not  paid  at  such  time  there  shall  be  added 
as  part  of  the  tax  a  penalty  of  5  per  cent,  together  with  interest  at 
the  rate  of  1  per  cent  for  each  full  month  from  the  time  when  the 
tax  becomes  due. 

(2)  Sec.  1308.  (a)  Tliat  any  person  required  under  Titles  V,  *  *  *  (which 
includes  sections  500,  501,  and  502)  *  *  *  to  pay,  or  to  collect,  account  for, 
and  pay  over  any  tax,  or  required  by  law  or  regulations  made  under  authority 
thereof  to  make  a  return  or  supply  any  information  for  the  purposes  of  the  com]iuta- 
tion,  assessment,  or  collection  of  any  such  tax,  who  fails  to  pay,  collect,  or  truly 
account  for  and  pay  over  any  such  tax,  make  any  such  return,  or  supply  any  such 
information  at  the  time  or  times  required  by  law  or  regulation  shall,  in  addition  to 
other  penalties  provided  by  law,  be  subject  to  a  penalty  of  not  more  than  $1,000. 

(6)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for  and  pay 
over  any  such  tax,  make  such  return,  or  supply  such  information  at  the  time  or  times 
required  by  law  or  regulation,  or  who  willfully  attempts  in  any  manner  to  evade  such 
tax,  shall  be  guilty  of  a  misdemeanor,  and  in  addition  to  other  penalties  provided  by 
law  shall  be  fined  not  more  than  $10,000  or  imprisoned  for  not  more  than  one  year, 
or  both,  together  with  the  costs  of  prosecution. 

(c)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for  and  pay 
over  any  such  tax  shall,  in  addition  to  other  penalties  provided  by  law,  be  liable  to 
a  penalty  of  the  amount  of  the  tax  evaded,  or  not  paid,  collected,  or  accounted  for 
and  paid  over,  to  be  assessed  and  collected  in  the  same  manner  as  taxes  are  assessed 
and  collected:  Provided,  however,  That  no  penalty  shall  be  assessed  under  this  sub- 
division for  any  offense  for  which  a  penalty  may  be  assessed  under  authority  of  sec- 
tion 317G  of  the  Revised  Statutes  as  amended    *    *    *. 

(d)  The  term  "person"  as  used  in  this  section  includes  an  officer  or  employee  of  a 
corporation  or  a  member  or  employee  of  a  partnership  who,  as  such  officer,  employee, 
or  member,  is  under  a  duty  to  perform  the  act  in  respect  of  which  the  violation  occurs. 

(3)  Section  3176  of  the  Revised  Statutes,  as  amended,  provides 
that  in  case  of  any  failure  to  make  and  file  a  return  within  the  pre- 
scribed time  there  shall  be  added  to  the  tax  25  per  cent  of  its  amount. 

(4)  Section  3176  of  the  Revised  Statutes,  as  amended,  further 
provides  that  in  case  a  false  or  fraudulent  return  is  willfully  made 
there  shall  be  added  to  the  tax  50  per  cent  of  its  amount. 


22        TAX  ON  TELEGRAPH,  TELEPHONE,  RADIO,  AND  CABLE  FACILITIES. 

AUTHORITY  FOR  REGULATIONS. 

SECTION   1309  OF  REVENUE  ACT  OF  1918. 

Sec.  1309.  That  the  Oommissioner,  with  the  approval  of  the  Secretary,  is  hereby 
authori7.cd  to  make  all  needful  rules  and  regulations  for  tlie  enforcement  of  the 
provision?  of  thi?  act. 

Art.  43.  Promulgation  of  regulcdions.^lw  pursuance  of  this  pro- 
vision of  the  act  the  foregoing  regulations  are  hereby  made  and 
prom'vilgated  and  all  rulings  inconsistent  with  them  are  hereby 
revoked. 

Daniel  C  Roper, 

Commissioner  of  Internal  Revenue. 
Approved  July  5,  1919: 

Carter  Glass, 

Secretary  of  the  Treasury. 


INDEX. 

fRcfcrences  are  to  articles.} 


A.  Art. 

Agencies  of  United  States,  exemption ,  14 

Ambassadors,  exemption 17, 18 

American  National  Red  Cross,  exemption 14 

Associated  Press,  exemption 29 

Authority  for  regulations c . . .  43 

B. 

Basis  of  tax,  leased  wire  and  talking  circuit  special  service 25 

Transmission  of  messages,  etc 6 

,    0. 

Carrier,  definition 2,  30 

Dispatches,  messages,  etc 2 

Exemption 30 

Leased  wire  special  service 19 

Messages  of,  transmitted  under  contract 9 

Charge,  definition 6 

Claim,  credit  for  overpayment  of  tax 39 

Refund  of  overcollection  of  tax 41 

Overpayment  of  tax 40 

Collect  messages 3 

Collection  of  taxes 32 

Combined  facilities  of  several  lines 1 

Commission  of  Training  Camp  Activities,  exemption 14 

Common  carrier,  definition 30 

Computation  of  tax,  leased  wire  and  talking  circuit  special  service 25-27 

Transmission  of  messages,  etc 6-9 

Consuls,  exemption 17,  18 

Contract,  messages  transmitted  under '. . .  9 

Credit,  overpayment  of  tax 39 

Payment  of  charges,  effect 33 

D. 

Definitions: 

"  Carrier  " 2,  29 

' '  Charge  " » 

"Common  carrier" 30 

"New^" 29 

"Public  press" 29 

"State" i:^ 

"Territory" 13 

"Transmission  " i 

"United  States " ? 

Diplomats,  exemption 17,  IS 

Director  General  of  Railroads,  evidence  of  right  of  exemption 1'. 

District  of  Columbia,  exemption ^ - 12 

23 


24  .  INDEX. 

_E. 

Art. 

Emergency  Fleet  Corporation,  exemption 14 

Evidence  of  riglit  of  exemption 16, 18 

Eiemptious,  Associated  Press 29 

Charges  of  14  cents  or  less 11 

Common  carriers 30 

District  of  Columbia,  services  rendered  to 12 

Evidence  of  right 16, 18 

Foreign  diplomats 17, 18 

Governmental  agencies 14 

Governmental  business 12 

Leased  wire  and  talking  circuit  special  service 29, 30 

Public  press 29 

Railroads  under  Federal  control 15 

States,  services  rendered  to 12 

Telephone  and  telegraph  companies 10-30 

Territories,  services  rendered  to 12 

United  Press 29 

United  States,  services  rendered  to 12, 15 

Extension  lines 22 

F. 

False  or  fraudulent  return,  penalty 42 

Federal  farm  appraisers,  exemption 14 

Land  banks,  exemption 14 

Reserve  banks,  exemption 14 

Foreign  Government,  exemption 17, 18 

Frank,  taxability  of  message  sent  under 7 

G. 

Governmental  agencies,  exemption 14 

Business,  exemption 12 

I. 

Imposition  of  tax,  carrier '        2 

Leased  ■wire  and  talking  circuit  special  service 19 

.       Transmission 1 

Inspection  of  records  of  telephone,  etc . ,  companies 34 

Intercommunication  and  interior  sj^stems .• .  23 

L. 

Leased  wire  special  ser\'ice,  imposition  of  tax 19 

Liberty  loan  committee,  exemption 14 

Long-distance  terminals 24 

M. 

Magazines,  exemption *. . .  29 

Moves,  changes  for 25 

N. 

News,  definition 29 

O. 

Origin  of  message,  determination  of  taxability 3-5 

Overcollection  of  tax,  refund 41 

Overpayment  of  tax,  credit 39 

Refund 40 

Overtime  telephone  messages,  computation  of  tax 8 


INDEX.  25 

P-  Art. 

Panama  Railroad  Co. ,  exemption 14 

Payment  of  taxes 31 

Penalty  for  nonpayment 42 

Penalties 42 

Periodicals,  exemption 29 

Place  of  filing  returns 36 

Private  branch  exchange  service 20 

Private  lines 22 

Promulgation  of  regulations 43 

Public  press,  definition 29 

Exemption 29 

R. 

Railroads,  leased  wire  and  talking  circuit  special  service SO 

Messages  of,  transmitted  under  contract 9 

Under  Federal  control,  exemption 15 

Rate  of  tax,  leased  wire  and  talking  circuit  special  service 25 

Transmission  of  messages,  etc 6 

Record  of  telephone,  etc. ,  companies,  inspection 34 

Red  Cross,  exemption 14 

Refund,  overcollection  of  tax 41 

Overpayment  of  tax 40 

Remittance  of  taxes  collected , 38 

Returns,  contents 35 

Delay,  penalty .- 42 

False  or  fraudulent,  penalty 42 

Place  of  filing 36 

Time 36, 37 

Reversed  messages 3 

S. 

Scientific  publications,  exemption 29 

Service  connection  charges 25 

State,  definition 13 

Exemption 12 

T. 

Talking  circuit  special  service,  basis  of  tax 25 

Computation  of  tax 25-27 

Extension  lines 22 

Imposition  of  tax 19 

Intercommunication  and  interior  systems 23 

Long-distance  terminals 24 

Private  branch  exchange  service 20 

Private  lines 22 

Rate  of  tax 25 

Tie  lines 21 

Telephone  and  telegi'aph  facilities  combined 1 

Telegraph  and  telephone,  companies,  exemption 30 

Termination  cliarges 25 

Territory,  dnfinition 13 

Exemption 12 

Tie  lines 21 


26  IIsDEX. 

Art. 

Time,  filinij  return? 30,  37 

Furiiishitig  li  ased  wire  and  laHviug  cinniit  spfnial  si  rvice  as  deteruiining 

taxnUiiily 26 

Origin  as  doterniiuing  taxabilir y  oi  nu  ssagcs,  etc 5 

r<,'nalty  for  delay  in  filing  returns 42 

Trade  publications,  exemption 29 

Transuiission,  deliuition 1 

U. 

United  Press,  exemption 29 

United  States,  definition ?, 

Exemption 12, 15 

Services  performed  partly  within  and  partly  without 27 

Taxability  of  messages  originating  within  or  without 3-5 

United  States  Food  Administration,  exemption 14 

Unitt^i  States  Housing  Corporation,  exemption 14 

United  Slates  Shipping  Board,  exemption 14 

War  Industries  Board,  exemption 14 

War  Baviugs  committee,  exemption 14 

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